Relief

Part of Clause 31 – in the House of Commons at 6:15 pm on 8 May 1991.

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Photo of Peter Hain Peter Hain , Neath 6:15, 8 May 1991

The Financial Secretary sought to deflect criticism of the Government's measure by saying that it was not all that the Government were doing on training. That is a statement of the obvious. But the proposed £20 million in tax relief on training costs is a drop in the ocean compared with the £245 million that has been cut from employment training and youth training this year. It is a tiny droplet compared with the £1.5 billion cut from public spending on training during the five years from 1987 to 1992.

The Government's proposal does not even begin to address the skills gap in Britain. In particular, it does not address the dilemma and the problems faced by women trainees. Women should be a prime target for any training scheme, especially in view of demographic trends which are causing a shortage of adult men and making it necessary to bring more women into the labour market. Many women do not have the qualifications to take advantage of the jobs that companies need to fill. Others who would like to return to the labour market after a period of caring for dependants but need to top up their skills to take advantage of opportunities are unable to do so. The measure does not even begin to address that problem.

Under the clause, there will be a deduction on the basic rate of tax, so those who pay a higher rate of tax will receive much greater relief. As women represent a small proportion of those in the higher tax bands, almost no women will benefit. In addition, the tax deduction will be available to non-taxpayers only in the form of a reduction in the cost of their training place. Many women who are on low pay cannot afford the massive cost that is often levied for a place on a training scheme.

The main beneficiaries of the proposal will be people who are already in work. They will be mainly professional people. Not many will be women and few will be low-paid workers. That should be considered against the background of the overall impact of the proposal. It is a molehill of a measure compared with the mighty mountain of the skills crisis in industry and across the economy. At present, 60 per cent. of trainees emerge without any qualifications and two thirds of our work force have had no training in the past three years. Many have had no training in their entire working lives.

The Financial Secretary referred to the rosy picture painted by the Confederation of British Industry by drawing selectively on its forecasts. I invite him to come back into the real world. For example, in west Wales, training places have been halved through the measures taken by the Government in the past year. One example is at a successful company called Kenyons in the town of Pontadarwe in the Neath constituency, which has trebled its turnover in the past two years. It builds industrial refrigeration plants and provides building services. It is a skilled engineering company employing 500 people in that part of the world. It is just the sort of company that we should encourage. In the past few months, its youth training places have been cut from 90 to 70, despite the fact that the company had the places and people wished to fill them. The funding was cut by 20 places.

Only after the managing director created merry hell, as he described it, was the company able to win from the local training authority an additional 10 places. Similarly, employment training places in that company were cut from 30 to 18. Again, that opened up a skills gap even though the company had the opportunity and the desire to fill it. All that is in an area where we desperately need engineering skills in order to compete with foreign companies, which are rapidly taking over our markets. I have been approached by business men in Neath who want to provide places for computer training, which is desperately needed in our information technology society. The funding for those places is not available.

Several of my hon. Friends mentioned the lack of training opportunities for people with special needs. Training places for people with special needs have also been cut. All in all, the measure does not address the real world. The £20 million tax relief for training which is being provided one way or another should be compared to the £1.1 billion of tax subsidies for personal pensions last year and the incitement to contract out of the state earnings-related pension scheme in the form of a £6 billion tax subsidy. The £20 million does not even begin to measure up to the needs of our economy.

The £20 million can also be compared to the tax subsidies to encourage people to take more and more shares and invest more in equities; yet in the past 10 years it has been highly profitable for individuals to invest in shares. People have received an annual gross return of 19 per cent. on their investments. Why is money spent in that direction when it should be spent on funding the training that we so desperately need?

The Financial Secretary complained that the Labour party's policy was one of compulsion. That is not the case. The Government have abandoned their responsibilities for training and their duty to fund and provide the training opportunities so desperately needed in the economy. The Government have washed their hands of those responsibilities. The Labour party says that the Government should fulfil their responsibilities and duties to people who want to train to fill the skills gaps that are appearing everywhere. The Financial Secretary appeared to suggest that he would leave it all to the private sector. But almost universally the private sector is not filling the skills gap. I would ask why the directors of large companies pay themselves 22.7 per cent. increases in their remuneration when they are not providing the funding for training places that we need?

The hon. Member for Beaconsfield (Mr. Smith) childishly suggested that we claimed that we could accomplish overnight the training revolution that is needed in Britain. No one claims that. The Labour party has never maintained that that would be the case, but we are saying that the Government are paying lip service to addressing the skills desert in society. People see, even if Ministers do not, that the Conservative party is a party of quick buck predators devouring our skills base as they asset-strip the economy. Labour is the party of enterprise and industry which is prepared to invest in skills for a strong economy.